One important component in the CAN SLIM investing guidelines is institutional sponsorship, the "I" in CAN SLIM. Today, medical and energy stocks continue to be bought by mutual funds.
One way to find stocks with this positive component is to check the screen of Stocks That Funds Are Buying, which is in the IBD Stock Screener.
This screen tries to identify stocks that mutual funds are buying or adding to their holdings. It compares other proprietary criteria found in MarketSmith, including Earnings Per Share Rating, Composite Rating, Relative Strength Rating and Sponsorship Rating. The result is a list of stocks triggered by increasing mutual fund ownership that can be analyzed and added to a watchlist.
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Novo Nordisk Is A Leader In Diabetes Care Products
Novo Nordisk is a Denmark-based medical company that produces 50% of the world's supply of insulin. Their products include insulin pens, growth hormone pens and injection needles. Novo Nordisk also produces drugs for obesity, hemophilia and growth disorders. The company services over 34 million people with their diabetes care products.
Mutual funds have been adding to the stock, and it was held by 279 funds in June, up from 273 in March and 247 in December. Novo is ranked No. 3 in the medical and ethical drugs category, which is No. 22 out of 197 industries IBD tracks.
Novo Nordisk has several positive CAN SLIM criteria including a 96 out of 99 Composite Rating, 71% return on equity and a 92 Relative Strength Rating.
Quarterly earnings-per-share growth has been modest and decelerating. They had an 8% EPS growth in March, an 11% increase in December, and a 17% gain in September. Analysts expect an annual EPS growth rate of 6% in 2022 and 22% in 2023.
The stock came out of a cup-with-handle base and is now forming a consolidation with a 122.26 buy point. Shares are near the 50-day moving average. and about 10% off the 52-week high. The chart's relative strength line has been steadily climbing.
Energy Stock Sees Buy Point
Equinor, a Norwegian oil and gas exploration company, also has businesses in renewables, carbon capture and hydrogen.
Mutual funds have slowly been adding to the stock, as it was held by 125 funds in June, up from 121 in March and 118 in December. Equinor is ranked No. 1 in the Integrated Oil and Gas industry group, ranked No. 6 out of 197 groups.
Quarterly earnings per share have been growing, coming in at $1.60 in the first quarter, $1.35 in Q4 and 85 cents in Q3. Analysts are looking for 100% annual EPS growth in 2022, but then a drop to 17% in 2023. The company has seen sales growth of 105% to 178% in the last three quarters.
Equinor earns a best-possible 99 Composite Rating and an SMR rating of A, which measures sales growth, profit margins and return on equity.
The stock is forming what looks to be a double-bottom base with a buy point of 38.80 on the chart. Share price has been below the 50-day moving average for about a month. Shares are about 14% off the 52-week high.
Energy Stocks: Canadian Solar Stock Has Potential
Canadian Solar is a Canadian solar developer of electricity and power plants. It has delivered solar modules to thousands of customers in over 160 countries.
Mutual funds have been adding the energy stock, with 229 funds owning shares in June, up from 219 in March and 213 in December. The stock is 55% held by mutual funds.
Canadian Solar is No. 5 in IBD's solar energy industry group. The group has moved up to No. 3 out of 197 groups, from No. 76 just three months ago.
Quarterly earnings per share growth dropped 61% in the latest quarter after reporting three positive quarters. Analysts are looking for 160% annual EPS growth in 2022 dropping to 26% in 2023.
The stock is forming a large double-bottom base with a buy point of 38.53. Shares rose above the 200-day moving average on July 8, but have pulled back below the 50-day moving average.
